Ukraine contract for international enrichment centre

01 June 2012

Russian-supplied fuel for Ukraine's nuclear power plants is to use uranium enriched at the International Uranium Enrichment Centre (IUEC) in Siberia, in which Ukraine holds a 10% stake. Armenia has also agreed to take a similar stake in the enrichment facility.

The IUEC has signed a contract with the Ukraine's Nuclear Fuel Holding Company, SC Nuclear Fuel, for the supply of nuclear fuel assemblies. Under the contract, Ukraine will provide natural uranium for enrichment at the IUEC. Once enriched, this uranium will then be transferred to Russian fuel fabrication company TVEL, who will produce fuel assemblies for shipment to Ukraine. The first shipment of enriched uranium to Ukraine is expected before the end of 2012.

Currently, most of the nuclear fuel requirements of Ukraine's nuclear power plants are met by TVEL - part of Russia's state atomic energy corporation Rosatom. However, enrichment services are not provided to Ukraine separately, but as part of the cost of the end-product - the fuel assemblies themselves.

Enriched uranium from IUEC is also set to be delivered to a new fuel fabrication plant being set up in Ukraine with Russia's assistance. SC Nuclear Fuel and TVEL signed an agreement for the facility's construction in late 2010. The plant - with a capacity of 400 tonnes of uranium per year - is scheduled to begin fabrication of fuel rods and assemblies in 2015. It will also begin producing fuel powders, pellets and assemblies by 2020.

The IUEC is sited at the Angarsk Electrolysis Chemical Combine in Siberia as a joint non-proliferation initiative of Russia and Kazakhstan. The centre will provide assured supplies of low-enriched uranium for power reactors to new nuclear power states and those with small nuclear programs, giving them equity in the project, but without allowing them access to the enrichment technology. The facility is under International Atomic Energy Agency (IAEA) safeguards and was licensed by the Russian nuclear regulator, Rostechnadzor, in 2008. It will sell both enrichment services and enriched uranium product.

Ukraine - which depends primarily on Russia to provide nuclear fuel cycle services, particularly enrichment - agreed to take a stake in the IUEC in 2008. This shareholding will enable the country to purchase the enriched uranium for a more favourable price.

Russia has also created a guaranteed reserve or 'fuel bank' of low-enriched uranium (LEU) under IAEA control, which will be managed by the IUEC at Angarsk. This comprises some 123 tonnes of LEU as UF6, available to any IAEA member state in good standing which is unable to procure fuel for political reasons. This fuel bank is fully funded by Russia, held under safeguards, and the fuel will be made available to IAEA at market rates, using a formula based on spot prices.

Armenia takes a stake

While Russia is to maintain majority ownership of the IUEC, up until now Kazakhstan and Ukraine have been the only other nation's to participate in the initiative, both taking a 10% shareholding each. However, last week, Armenia - which has one power reactor in operation - closed a deal under which it will take a 10% stake in the IUEC at a cost of 2.6 million rubles ($77,530).

In order to become a partner in the initiative, Armenia is required to sign intergovernmental agreements with both Russia and Kazakhstan. Rosatom noted that, "For simplicity, the procedure is reduced to an exchange of diplomatic notes where the ascending state entitles an organization authorized to become an IUEC shareholder and represent interests of the newcomer country." The authorized organization is then required to buy a package of IUEC shares from Rosatom.

With Armenia now taking a shareholding, Russia now holds a 70% stake in the IUEC.